Bad Debt Write-Off Entry

Steps:

• Debit to Irrecoverable debts records the expense for an uncollectible amount.
• Credit to Tobias reduces accounts receivable by removing the owed balance.
• This entry writes off the debt as permanently unrecoverable.
• It confirms the debtor's inability to pay, per standard accounting practice.

Why C is correct:

• Writing off a debt to Irrecoverable debts means it is deemed uncollectible, directly indicating the debtor cannot pay (per double-entry bookkeeping rules for bad debts).

Why the others are wrong:

• A: Provisions for doubtful debts use an allowance account, not a direct write-off to Irrecoverable debts.
• B: Receipt of payment debits Cash and credits Tobias, not Irrecoverable debts.
• D: Recovery of a prior write-off debits Cash and credits Irrecoverable debts recovered, not the reverse.

Final answer: C